The price of a new electronic toy increases from $16 to $24 and the quantity demanded decreases from 1,050 to 950 per month as a result. Based on this information, the price elasticity of demand (in absolute terms) is estimated to be equal to:
a. 5.00
b. 4.00
c. 0.75
d. 0.25
d
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Refer to the scenario above. If India wants to repay a lower sum of money to the U.S., it should:
A) peg the exchange rate below 50 rupees per dollar. B) peg the exchange rate to 60 rupees per dollar. C) continue to use a flexible exchange rate regime. D) peg the exchange rate to 70 rupees per dollar.
The country whose production possibilities frontier is illustrated above is currently at position A on the production possibilities frontier. If it wishes to move to position B, it will
A) find this change impossible to achieve given the resources it currently possesses. B) have to employ all currently unemployed resources to accomplish this. C) incur an opportunity cost of having to give up some butter in order to make the additional amount of guns desired. D) be able to make the desired switch only if there is a significant improvement in the technology available to the nation.
In the new classical model, all wages and prices ________
A) are completely flexible with respect to expected changes in the price level B) are fixed with respect to expected changes in the price level C) are flexible with respect to the value of the dollar D) are fixed with respect to the money supply
A country that must inhibit imports should give preference to
A. quotas over tariffs because quotas are less likely to distort trade patterns between nations. B. tariffs over quotas because, unlike quotas, tariffs offer no special benefits to inefficient exporters. C. export subsidies over quotas or tariffs because export subsidies can protect a nation’s domestic producers. D. an embargo wherever possible because an embargo can serve as a political weapon in addition to being a “trade stopper.”